The US wealth management industry and the clients it serves are preparing for the possibility of higher taxes to be paid by wealthiest citizens after president Barack Obama proposed $1.4 trillion in new revenues from top-earning individuals yesterday.

The tax proposals in Obama’s fiscal 2013 budget plan, were, according to media reports, rejected by business groups and congressional Republicans, who said the ideas are part of Obama’s re-election strategy and gave them little chance of advancing into law in 2012.

It has been argued by some commentators that the US – contrary to what some might assume – has one of the most progressive tax regimes among members of the Organisation for Economic Co-operation and Development. (Middle-earning Europeans typically pay proportionately more tax than comparable Americans, in part due to the impact of value added taxes).

Obama reversed his previous policy of taxing dividends more lightly than wage income, according to a report by Bloomberg. The budget plan, if enacted, would raise $206.4 billion over 10 years by treating dividends as ordinary income for married couples making more than $250,000 a year and individuals making more than $200,000, the report said.

The president proposes a top individual income tax rate of 39.6 per cent in 2013, up from 35 per cent. Long-term capital gains taxes would apply at a top rate of 20 per cent, up from 15 per cent. The top dividend tax rate is now 15 per cent.

An additional 3.8 per cent tax on the unearned income of couples earning $250,000 and individuals making at least $200,000 will take effect next year as part of the 2010 health care law. As a result, under Obama’s plan some taxpayers would pay 43.4 per cent in federal taxes on their dividends next year, almost three times what they now pay and coming on top of corporate taxes.